Q4 2020 Omaha Industrial Market Report
Omaha is a natural distribution hub due to its central location, strong agriculture industry, and ability to transport via rail, road, river and air. Demand for industrial space, particularly distribution, warehouse, and cold storage has only increased since the pandemic started and consumers rely increasingly on e-commerce. As a result, fundamentals continue to be strong, with vacancies compressed below 5% through late 2020. This has not only kept national tenants like Kellogg and Tyson Foods in the metro, but also brought Google, Facebook, and encouraged Amazon to increase its footprint in the market. The retailer announced in October 2020 that it would add a 700,000-SF distribution center in Sarpy County, bringing around 1,000 jobs with it when it completes in 21Q3. Through positive demand returned late last year and demand for logistics space has only increased as more people order groceries and goods online in the wake of the coronavirus, the pace of asking rent gains has declined, rooted in asking rent losses in the specialized industrial sector. Developers have yet to slow down, with more than 1.8 million SF underway in 20Q4. With almost 80% of the space preleased and continued strong demand here, the additions are unlikely to destabilize occupancies. While investment slowed initially with the onset of the pandemic and subsequent stress on the economy, strong economic recovery in 20Q3 encouraged investors. Sales volume was at roughly 60% of the average annual volume in the past five years.